ASSESSING RISK
Risk can be defined as the events that may happen unexpectedly and their occurrence will lead to harmful effects or those effects that are not desirable. Risks are not inevitable in any business. This is because of the impact they cause. Risks are associated with loss of the business. Risks are the reason behind the losses that businesses make. Risks are the reasons for the last minute helter-skelter rush. When a risk occurs, it has to be acted upon immediately to prevent it from further damage. A risk occurs with a lot of harm. All the companies or business have at a point experienced a type of risk.
When given the task of risk assessment, I would commence by giving the management the various types of risks that the company can get exposed. They can all be categorized into 3 main sections.
Pure and speculative risks
Fundamental and particular risks
Enterprise Risks
Pure and Speculative Risks
These are the risks where there is the possibility of either a loss or no loss. This is the risk that the only option that can be faced is either whether there is a loss or there is no loss.
There are various types of pure risks. Personal risks are an example of the real risks. A simple example of a personal risk is the risk of lack of a job. Another type of real risk is property is. This is the risk that is associated with physical properties like fire damaging property. Liability risks are the risks like that of a person getting injured due to defective equipment.
A speculative risk is that risk that there is either the outcome of profit or a loss. For example, in the investment of shares, there is either the result of profit or a loss. There is no time that both of them will happen together at the same time.
Fundamental and Particular risks
A theoretical risk is a type of risks that happens or occurs to a significant number of individuals in a nation or an economy. They are the risks that affect mostly investors countywide. This is the risks like those that are caused by inflation in an economy.
A particular risk is the kind of risks that affect an individual. This risks cannot be felt by the whole community. This is the danger as those of a personal property getting stolen. For example, if the vehicle of an individual is stolen.
Enterprise Risks
Enterprise risks are the risk that entails almost all the types and kinds of risks that an enterprise or firm can face as a whole. This risk involves the speculative risks, real risks, strategic risks among others. This type of risks can be categorized into various full categories. They are;
Financial Risks
This is the risks that are involved with the general financial positions of a firm. Any activity or function that could lead to the company experiencing a loss. Financial risks may include; Credit risks, Foreign exchange risks investment portfolio risks among different risks. These risks can do the business to accomplish the financial obligations it has.
Operational Risks
They are the risks that involve the activities that are carried out on a daily basis by the business.
After listing the possible risks that the business could face, I would then get into details on how to undertake the process. This will be at first listing the individuals that I would use to do a proper assessment The individual that would be important in the evaluation are;
The clients of the business.
The shareholders.
All the supervisors
The Unions that the company is affiliated to
Government organizations
And also the employee’s representatives.
After giving the management the list of individual that will be required, I would then outline to them how the whole procedure will be. The procedure